Making the best of mediocre speakers

I want to get the best system I can, given unfortunate constraints. I'm building a new 2-channel listening system in a new apartment, and my wife insists the speakers in our 17x23 living-room must be in-walls. They fit into a particular lowered soffit, so they'll be installed just above head height. The Sonance Z4s are the best I could find to fit the area; they're OK, but obviously this is a compromise.

So I am planning on a nice subwoofer (which, btw, must also be in-wall), maybe by James, to beef things up. Then about 3K for separates--I am considering a Rowland 102 amp, a Rogue Audio Perseus preamp, and a Cambridge or NAD CD.

My question is, am I wasting money, given the in-wall speakers and placement? Do a nice sub and electronics make up for the speakers? Or should I throw in the towel and just get an Arcam Solo or something?

Many thanks.
Price...I am not so sure that in-wall speakers have to mean mediocre sound. I have never had any so I do not speak from personal experience but my local audio dealer (Goodwins High End in Boston) carries a line of in-wall speakers from Wisdom Audio ( that he says rivals many of the big name high-end speakers. They are not cheap rivaling high-end speakers on price as well but if budget is not an issue this may be one way to go. Here are some reviews:
Good in-walls can't sound pretty nice. The problems are the height and bass. Yours are mounted too high as you know. You need ones with angled tweeters to help compensate. A good sub will help a lot too (even an in-wall one). However, don't bother with $3k worth of gear if your speakers aren't up to snuff. There's some neat units by KEF, Thiel and others that remain fairly hidden.
Choose one:

A. Find another "wife." - "Is it you that wants the in-wall speakers?"

B. Find another hobby.
Thanks guys. Bday0000: there is a wife, but you are right insofar as I agreed with her insistence. It is a difficult room: open on both narrow ends of the rectangle, with 3 doorways and a dining room area, and no shelves for bookshelf speakers... Short of putting the speakers on stands in the middle of the room, which was what she vetoed (I volunteered to keep them grouped together along the wall when not in use, and that was declined), there are no easy solutions. Which is where the in-walls come in.

Thanks for the suggestions of angled tweeters, and the hope that perhaps Thiel or someone else makes good in-walls.

Maybe I could rephrase the question as this: given the constraints of placement and of having to use fairly small in-walls, what can an audiophile do in order to get the best possible results?

From reading the threads here on Audiogon I get the sense that some people (probably a minority) think that lesser speakers can be brought along by great sources and electronics, and made to really sing. Others may say don't waste the time and money. That's my real question, though I am starting to realize that maybe this just can't be a true listening room!

I appreciate everyone's advice.
First of all,I hope you own the apartment,or got permission to do this.In the wall speakers just can't seem to sound anything like normal speakers.And another thing,are there any neighbors behind those walls with the speakers that may not enjoy the same thing your listening to?I hope not.